Fit & Slim is a health club that offers members various gym
services. F&S accounts reports under the ASU.

1.

Assume F&S offers a deal whereby enrolling in a new
membership also entitles the member to receive a voucher redeemable
for 25 percent off a yearA????1s worth of premium yoga classes. A new
membership costs $800, and a yearA????1s worth of premium yoga costs an
additional $600. F&S estimates that approximately 40 percent of
the vouchers will be redeemed. F&S offers a 10 percent discount
on all courses as part of its seasonal promotion strategy.

b.

What amount of the transaction
price would you allocate to the discount voucher on yoga
course?(Round your answer to 2 decimal
places.)

c.

Prepare the journal entry to recognize revenue for the sale of a
new membership. Clearly identify revenue or unearned revenue
associated with each distinct performance obligation. (If
no entry is required for a particular event, select "No journal
entry required" in the first account field.)

2.

Assume F&S offers a A????1Fit 50A????1 coupon book with 50 prepaid
visits over the next year. F&S has learned that Fit 50
purchasers make an average of 40 visits before the coupon book
expires. A customer purchases a Fit 50 book by paying $500 in
advance, and for any additional visit over 50 during the year after
the book is purchased, the customer can pay a $15 fee visitation
fee. Depending on the season, F&S typically charges between $12
and $18 to nonmembers who wish to work out on a single day.

b.

What amount of the transaction
price would you allocate to separate performance obligations?

c.

Prepare the journal entry to recognize revenue for the sale of a
new Fit 50 book. (If no entry is required for a particular
event, select "No journal entry required" in the first account
field.)

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